Poland’s Supreme Administrative Court ruled on April 9, 2025, that exceeding the €2 million revenue threshold disqualifies small taxpayers from the 9% CIT rate for the entire tax year.
The NSA Ruling on Preferential CIT Rates
The Supreme Administrative Court (NSA) issued a ruling on April 9, 2025 (case II FSK 991/23), clarifying that the 9% CIT rate is a conditional, year-long privilege. Exceeding the €2 million revenue limit, even marginally, requires the application of the standard 19% rate to the total income achieved in the tax year.
This decision eliminates the possibility of hybrid settlements where income up to the threshold is taxed preferentially and the excess at the standard rate. For companies balancing on the edge of the threshold, this may cost tens of thousands of zlotys.
Case Background and Taxpayer Argument
The proceedings were based on a CIT-8 tax return correction filed by a company that exceeded the revenue threshold during the tax year. The company argued that the legal structure allowed for the simultaneous application of two tax rates within one settlement year.
The taxpayer sought a refund, claiming that only the income exceeding the limit should be subject to the 19% rate. While economically logical, the court found this argument lacked support in existing legal regulations.
Position of Tax Authorities and Lower Court
Tax authorities rejected the interpretation, stating that the CIT Act does not provide a mechanism for applying two tax rates to the same taxpayer in one year. They emphasized that the 9% rate is an exception to the general rule and requires all statutory conditions to be met cumulatively throughout the year.
The Provincial Administrative Court (WSA) in Gliwice upheld this restrictive interpretation, noting that the revenue limit is a condition “sensu stricto.” The court added that the lack of provisions for proportional division of the tax base precludes an expansive interpretation of preferential rules.
NSA Legal Analysis and Conclusions
The NSA maintained the WSA’s ruling, noting that preferential CIT regulations must be interpreted strictly. Because the law refers to the “tax year” as a whole, partial application of the preference is excluded.
The court further stated that the legal system does not provide for hybrid taxation for a single entity in one year. The NSA also rejected claims of constitutional violations, ruling that the interpretation adheres to the literal wording of the law and the legislator’s intent.
Practical Consequences for Businesses
Companies must continuously monitor revenue as they approach the €2 million threshold. Even a minimal excess, such as one zloty in December, disqualifies the taxpayer from the 9% rate for the entire year.
Businesses may need to strategically plan transactions, potentially deferring contracts to subsequent tax years. In some cases, accepting an additional contract late in the year could result in a tax increase that outweighs the economic gain of the transaction.
